G.R. No. 253043 , June 13, 2023
Philippine Health Insurance Corporation, Petitioner, vs. Commission on Audit, Respondent.

FACTS

The Board of Directors (BOD) of the Philippine Health Insurance Corporation (PHIC), a government-owned and controlled corporation (GOCC), issued Board Resolution No. 1135, s. 2008, creating the position of Corporate Secretary with Salary Grade 28. Subsequently, through Board Resolution No. 1301, s. 2009, the PHIC BOD appointed Atty. Valentin C. Guanio to the said position effective September 1, 2009. Atty. Guanio received salaries, allowances, and benefits totaling ₱1,445,793.69 from September 1, 2009, to December 31, 2010. On post-audit, the Supervising Auditor issued an Audit Observation Memorandum, stating that the creation and filling up of the position required the imprimatur of the Department of Budget and Management (DBM) and submission to the Office of the President for review and approval. PHIC argued that the creation was pursuant to its mandate under Section 16(n) of Republic Act No. 7875 , as amended, and that the position was not new. The Commission on Audit (COA) issued a Notice of Disallowance against the payments, reasoning that the creation and appointment were done without DBM authority. PHIC appealed to the COA Corporate Government Sector and later to the COA Proper, which affirmed the disallowance. The COA Proper held the approving and certifying officers and the BOD solidarily liable for refund but absolved Atty. Guanio, considering him a de facto employee in good faith. PHIC filed the present petition.

ISSUE

Whether the COA Proper gravely abused its discretion in affirming the disallowance of the salary, allowances, and benefits received by Atty. Guanio pursuant to his appointment as corporate secretary by the PHIC BOD.

RULING

The Court found the petition partly meritorious. The COA did not commit grave abuse of discretion in affirming the disallowance. The creation of the position of Corporate Secretary and the appointment of Atty. Guanio thereto, along with the grant of corresponding salaries and benefits, were invalid for lack of the required approval from the DBM. While PHIC enjoys fiscal autonomy under its charter, such autonomy is not absolute and must be exercised within the standards and limitations set by existing laws, particularly the Revised Administrative Code of 1987 and the Salary Standardization Law. The DBM retains the authority to review and approve position classification and compensation plans of GOCCs. The Court upheld the disallowance but modified the liability of the parties involved. Following the doctrine of quantum meruit and the principle of unjust enrichment, Atty. Guanio, having rendered services in good faith, is not required to refund the disallowed amounts. Liability for the refund rests solely with the approving and certifying officers who acted in bad faith, gross negligence, or malice in authorizing the illegal disbursement. The members of the PHIC BOD who approved the creation and appointment are also solidarily liable for the refund.